Sales Slump May Continue in February, Warn Business Groups

High street sales slumped in January and are likely to fall again in February, a report by the Confederation of British industry (CBI) has warned.

The business group’s quarterly distributive trades survey, which polled 135 retailers, highlighted that despite modest growth in December, sales volumes fell in January with a balance of 22 per cent of retailers reporting a decrease on a year ago – the lowest level since March 2009.

According to the report, most retailers said sales had been disappointing for the time of year and many expected levels to fall again in February.

“Shoppers have reined-in spending across the board at the start of the New Year after taking advantage of early discounting last month, which boosted pre-Christmas sales.”

Online and mail order sales – including smaller specialist retailers – had “performed well”, he said, but growth was still down on December’s figures.

Consumers were particularly reluctant to buy big-ticket items such as washing machines and fridges, which had contributed to the poor results.

The British Retail Consortium said that poor January sales levels were unsurprising as most shoppers stayed away from the high street once the festive period was over.

“We would certainly expect people to make cutbacks in January,”

said BRC spokeswoman Sarah Cordey.

The Silver Jubilee in June and the Olympics, which start in July this year, were likely to boost trade for retailers, including smaller operators, Cordey said, but recovery on the high street “could be a long way off” unless profitability in retail improved.

“It’s not just a question of sales levels,” she added. “Higher commodity prices, increased transport and utility costs are all having a serious impact on profit margins, and retailers are being forced to offer heavy discounts just to get shoppers through the door. Unless these factors change, the high street will continue to suffer.”

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